In our previous blog post we focused on individual insurance plans as our main topic, covering areas that schools and educators should consider when implementing or recommending individual insurance options to their students. In the second part of this series, we are turning our attention to group insurance plans.
Group insurance plans are typically characterized by a blanket insurance coverage that is purchased by the institution for their students. Institutions typically collect premium from their students by adding the cost of insurance into their tuition. Group numbers consist of at least 50 participants and the more participants enrolled under the plan, the more flexibility schools will have when customizing benefits.
One advantage with a group insurance plan is that institutions have more control over the benefits being offered. Schools have the option to pick and choose the benefits they want their students to have – of course this can affect the cost of the insurance as well. For example, you may be able to include or exclude coverage for organized sports, maternity, mental health or other benefits that you deem necessary in addition to the standard core benefits such as doctor office visits, hospitalization, evacuation and repatriation.
Another advantage of a group insurance plan is having the peace of mind that all students are covered under a plan with the same benefits the group deemed necessary. The school also has complete control over enrollment, the student’s dates of coverage and benefit amounts.
How does PPACA affect group insurance plan?
In 2010 the Affordable Care Act was passed into law and defined student group as health insurance offered to students and their dependents under a “written agreement between an institution of higher education and an issuer.” In short, this means that ACA regulations apply to student group plans that contract directly with the insurance company, including group plans for international students.
Insurance companies are now required to offer specific benefits and carriers have been granted a phase in period in which they will need to comply with the new requirements. Some of these benefits are already in force and the rest will be phased in throughout the year. The main requirements are:
- Currently, plans may not impose lifetime limits to coverage. Annual limits are currently at $500,000 until January 1st, 2014, after which they must be unlimited.
- Waiting periods or limitations for pre-existing conditions cannot be imposed on students younger than 19 years of age (pre-existing coverage for all begins in 2014).
- Wellness/preventative care must be covered without cost-sharing.
With this new legislation, benefits on student group plans will likely increase and this means higher premiums for most annual group plans. We have recently written an extensive blog post about the new laws and how this impacts plans – so please visit this for more information and more details.
How do you purchase/ evaluate group insurance plans?
The purchase process for group insurance plans is often much lengthier for institutions either through an official RFP process, or informally with multiple carriers. Group insurance plans are medically underwritten based off a number of factors that include the number of students you anticipate, their age range, the type of benefits requested, geographical location (the cost of health care varies greatly across the USA) and any past years claims experience. All these factors, and more, will come together to construct your plan pricing, and typically this process can take up to 2 weeks for an initial quote, often longer for more complex or larger cases. NAFSA is usually a great starting point if you’re looking for carriers with experience in coverage specific to international students or study abroad.
When reviewing and evaluating group quotes, obviously the plan benefits and pricing are one of the most important factors to consider when comparing plans, however other considerations include:
Carrier Rating – nothing is more important than the financial strength of the insurance company who is backing your insurance plan. The two main insurance carrier rating companies are A.M Best and Standard and Poor’s, and ideally you want to have an insurance company that has a rating of A or more for your insurance plan. Lower ratings can indicate financial instability with your carrier so it is always advised to make sure your carriers rating is as high as possible.
Claims/Service – service and claims handling will be the primary source of interaction with your insurance plan, therefore it is paramount that you have high quality access to this service. One consideration is to find out if your claims/ service are handled in-house or outsourced, and if it is outsourced whether it is outsourced all in one location or multiple locations. Of course the ideal situation is that all your claims and services are in-house, however having this process outsourced can be advantageous if everything is outsourced to one location. You will also want to make sure your participants have access 24 hours a day, and with language capabilities if you are handling international students.
Provider Networks – carriers use provider networks to help control the cost of medical care and to make access to medical easier for students. Medical providers/facilities contract with networks and agree to accept a specified payment for medical care/treatment. If your plan has a required network, you should check the availability of providers/facilities in the area where the plan will be used most.
Experience – it’s a good idea to use carriers that have experience working with international students. Their needs can differ greatly from US students – most international students find the US insurance market to be very confusing. Carriers with international experience usually have multi-lingual customer service and documents available which can be very important, especially during emergencies.
Account Manager – having a direct point of contact that you can rely upon for any issues can be the difference between a good insurance plan and an excellent one. This representative can also be on-hand for student orientations and help educate students about the healthcare system in the USA.
Which one is right for you? Group or Individual
There are of course, benefits and drawbacks with both individual and group insurance plans. Individual insurance plans allow for easy administration as the student can purchase the plan directly with no interaction from the school – but benefits are often limited to the plan design and cannot be altered. Group insurance plans offer more flexibility and control for the schools over plan design but also in making sure all students have the same coverage without any gaps.
However, since the introduction of healthcare reform, the landscape has started to change and group insurance plan premiums are starting to increase. As we highlighted above, the benefit changes that are required by group insurance plans are increasing plan premiums to a point that many international students simply cannot afford. Meanwhile, individual insurance plans are still available that do not need to meet all the same reform requirements like group plans do – this often means they are more competitively priced, while still offering comparable benefits.
At the end of the day, you will have to weigh the options and see what is best for your school – whether you place your emphasis on pricing, benefits or administration for your organization, all those will impact what option is best for you and your students. If you need any guidance, let us know as our team will be happy to guide you in the best direction.
* Health Care Reform Photo Courtesy of Shutterstock